Former Alaska Gov. Sarah Palin fired a shot at the Federal Reserve in her coming-out speech in Hong Kong today, blaming the central bank for the current crisis and disagreeing with the idea that the Fed should have a greater role in preventing the next crisis. It was an echo of fellow Republican and Texas congressman Ron Paul, who has led the charge in Congress to perform an audit of the Federal Reserve with an eye to eventually eliminating it.
“How can we discuss reform without addressing the government policies at the root of the problems? The root of the collapse? And how can we think that setting up the Fed as the monitor of systemic risk in the financial sector will result in meaningful reform?” she said. “The words ‘fox’ and ‘henhouse’ come to mind. The Fed’s decisions helped create the bubble. Look at the root cause of most asset bubbles, and you’ll see the Fed somewhere in the background.”
More generally, Mrs. Palin took the tack that the financial crisis occurred because government got in the way of free enterprise.
“Lack of government wasn’t the problem, government policies were the problem. The marketplace didn’t fail. It became exactly as common sense would expect it to,” she said. “The government ordered the loosening of lending standards. The Federal Reserve kept interest rates low. The government forced lending institutions to give loans to people who as I say, couldn’t afford them. Speculators spotted new investment vehicles, jumped on board and rating agencies underestimated risks. So many to be blamed on so many different levels, but the fact remains that these people were responding to a market solution created by government policies that ran contrary to common sense,” she said.
On the question of more complex economic issues, Mrs. Palin told the hall filled with bankers and economists, that would come later.
“Maybe you’re hoping to hear me discuss the derivations of the formula for effective rate of protection, followed by a brief discussion of the monetary approach to the balance of payments,” she said. “If time allows, a quick summary of factor price equalization. Maybe some thoughts on quantitative easing, but that’s for next time. Because I have spent my life closer to Main Street. That’s what I want to talk about is that view from Main Street,” she said.
See Also: WSJ Blogs: Ron Paul Q&A: Audit The Fed, Then End It
Nothing is more important at this period of time than auditing the Fed and stopping forced “swine flu” vaccinations. Any politician who tries to distract you off these two issues does not have his finger on the pulse and heartbeat of liberty.